Vacancy rates in big box distribution facilities have reached a long-time low at 4.9% in the Cleveland market.The buildings typically labeled as “big box distribution” facilities are characterized by high ceiling height of 24 feet to 40 feet, excellent truck docks, and Early Suppression Fast Response (ESFR) sprinklers. They are designed to allow many kinds of goods to be stored in racks or high piles with out in-rack or other supplemental sprinklers. They are huge buildings but a niche — and the cream of the crop — in the industrial market.This year, vacant space in big box buildings has continued to be absorbed quickly.In the South submarket, 5575 Venture Drive in Parma, has landed Pack Rat as a long-term tenant for 30,000 square feet. Only 12,000 square feet remain. In the Southwest, 12850 Darice Parkway in Strongsville was sold, and the vacant space will be absorbed by the new owner. However, the biggest transaction of the year occurred in the Southeast, where the 200,928-square-foot facility at 7800 Cochran Road in Glenwillow is now leased. For some time, this had been the biggest vacancy in the big box market; this transaction has changed the market dramatically.Even though big box buildings make up only 5% of the total industrial market, they accounted for nearly 30% of all industrial absorption in 2012. At 4.9%, the current vacancy rate in modern distribution facilities is far lower than 9.6% in the rest of the industrial market.

Distribution properties are sizzling along I-271

Even though big box buildings make up only 5% of the total industrial market, they accounted for nearly 30% of all industrial absorption in 2012. At 4.9%, the current vacancy rate in modern distribution facilities is far lower than 9.6% in the rest of the industrial market.The highest concentrations of modern distribution buildings are in the Southeast submarket, with more than 9 million square feet of space, and the Southwest submarket, with 3 million square feet of space. The Southeast market is hot, and due to a few recent major leases, now has a diminutive vacancy rate of 3.84%. Facilities in the Southeast submarket have the highest demand, likely because its location is perfect for distribution. (The Southeast submarket offers highway access to I-77, I-80, I-480 and I-271.)Spaces in the Southwest are not filling up as quickly as they are in the Southeast, and it's the only submarket where the big box vacancy rate is higher than the total industrial vacancy rate. However, much of this space may be considered un-leasable because it is too small for distribution-oriented users. All but two availabilities in the Southwest market have more than 50,000 square feet available.

Go south to find larger vacancies

Due to recent leasing activity, it has become increasingly clear the big box market is now an owner's market.Companies that are looking for more than 100,000 square feet of big box space within Greater Cleveland have limited options. Currently, only one building meets those requirements. In fact, vacancy is so low in the Southeast that spec building may be coming in the near future. However, there are a few more options once you start looking in the Akron/Canton region, which still has some major vacancies. Terry Coyne is an executive managing director in the Cleveland office of Newmark Grubb Knight Frank and works in the region's industrial and office markets.

Morning Roundup

Business headlines from Crain's Cleveland Business and other Ohio newspapers — delivered FREE to your inbox every morning. Sign up for the Morning Newsletter.